High attrition may upset the hospitality applecart

MUMBAI: With a boom imminent in the Indian hospitality industry, hotels could face a huge manpower crunch at lower to mid-management levels due to high attrition levels.

While industry has seen a sharp growth in occupancies and ARRs (average room rates) in the past year, total capacity could end up doubling in the next three-four years.

The high attrition levels could end up scuppering growth. While the management of The Leela Group puts their churn rate at a 22%, industry observers feel that it could be a lot higher for other hotel chains with lesser brand equity.

The attrition problem exists both at the entry as well as the mid-management level. According to industry insiders, 10-20% of the graduates from hotel management institutes are now taking up jobs in the financial services sector. The problem becomes more acute at the mid-management level, with over 50% choosing to opt out in favour of other service sector jobs, of which BPO seems to be a hot favourite.

"Many hotel management graduates use jobs in the hospitality industry as a stepping stone to garner some experience before they move out to more lucrative jobs in banks and BPOs," said GM Bhuvan, head of department, hotel management, Christ College.

Typically, these employees spend 3-5 years in the hotel industry by which time they hit mid-management. That's where pay packets start stagnating and they tend to move out of the industry and take up jobs in customer service, facilities management and relationship management.

The disparity in salaries between the hospitality and financial services sectors has only become more stark now, with hospitality being one of the few industries not to have raised salary levels in a big way over the last few years.

The hotel industry is slowly beginning to address this disparity. Says K Narasimha Rao, director (finance), Viceroy Hotels, "The competition from other sectors has forced us to increase our salaries by 20-30% in the last one year."

Higher salaries are the main draw for these hotel management graduates moving away from the industry.

Entry-level salaries in the hotel industry range between 1.5-3.6 lakhs p.a. which isn't much different from most other sectors. But salaries hit a roadblock at the mid-management level, forcing employees to look outside of the industry.

Also, a fatter pay package is not the only attraction. Better work conditions in other industries, particularly in banks where most employees enjoy a five-day week and a 9-6 job have become a big draw for employees moving out of the hospitality industry.

Says RK Sharma, director of the Mumbai-based Institute of Hotel Management and Catering Technology, "The human resources practices in the hospitality industry is rather poor. They have not been able to evolve with the demands of the market."